Sunday, March 26, 2023

LGS Net Income

The time has come at last.

I am migrating the weblog and diving into deeper analysis on Substack: LGS Net Income

The introductory article and About page have more details.  Over time I'm going to migrate most of the content from Blogger over to the new Substack blog, and most of that will remain free to read.  The big addition is where I can provide extremely crunchy and relevant education and analysis as a paid blogger on that platform.  I already pay for content from some sources (such as Caffrey's great Patreon offering) and it is well worth it.  Hopefully I can deliver the goods similarly on LGS Net Income.

Thank you all for being a part of this wonderful experience, and I'll see you on the other side!



Friday, March 3, 2023

A Cell Divides

I'm opening another location in about a week, west of my current store.

Burying the rest of that lede, I was surprised at how much my last article circulated.  It did the highest numbers I've seen in a while.  It looks like it got the attention of a fair number of people in the industry, and I got to meet some new friends along the way, which is always something you hope for.

I did see some consistent questions and feedback about my assertions in the last article, and some of them were reasonable queries that I figured I should answer.

The first and easiest response to dispose of is along the lines of, "Hey Bahr, haven't you been among the people clamoring for Wizards of the Coast to reprint everything?  And yet in your article you say that the singles market is collapsing because of excessive reprints.  What gives?"

I did and still do clamor for Wizards to reprint everything so that players can get the pieces to play the game.  The difference is one of degree.  I was a bit clumsy/inelegant in stating that Modern Horizons 2 was harmful to card values, because that statement lacks important nuance -- more on that in the next question.  By far the larger overwhelm was the flood of Commander deck reprints coming out with virtually every booster product.  Each deck, from among two to five per release, contained what added up to hundreds of cards in reprints at a cadence faster than bi-monthly at the very least.  Booster set reprints aren't nearly as overwhelming, and if we look at things like the cards that showed up in the Double Masters sets, the Modern Horizons sets, and the Remastered sets, both the volume and frequency of reprints are much more sustainable.  So.  On balance I'd rather Wizards reprint more cards rather than less, but that dial got turned all the way up to eleven and it is proving too much.

But by far the most frequent article response I saw was players arguing about this:

"Singles like Vendilion Clique and Containment Priest are great examples of once $20-$40 all-stars that are now literal bulk dollar rares."

They don't see the "middle" as being a real thing or as substantial as what I described, on the basis that they believe Clique and Priest were already outmoded and the erosion of their values could be attributed purely to deck inclusion, and since I did not name-drop an exact list of other cards, there must not be any others.  I agree that deck tech played a part for Clique at the minimum, and I contend that the reprint volume of Clique also played a meaningful part -- and the reprint volume of the cards that superseded it.  And for those who want me to name-drop more cards, I am happy to.  Look here.

More cards that used to be evergreen "chonk money," and have been reprinted to a fraction of value:

  • Pithing Needle
  • Thalia, Guardian of Thraben
  • Meddling Mage
  • Shardless Agent
  • Celestial Colonnade/Creeping Tar Pit
  • Goblin Rabblemaster
  • Knight of the Reliquary
  • Mishra's Bauble (which I'd agree it was silly for this one to become expensive in the first place)
  • Scavenging Ooze
  • Solemn Simulacrum
  • Theros Temples

By and large these cards are still played, at a minimum in Commander and where optimal also in the sixty-card formats.  That is also still not a comprehensive list, and I don't think it's necessary for me to deep-dive repeatedly for more examples; if you don't think the "middle" eroded, good for you, go on with your day.  For those of us who buy lots of cards all the time and accrue large inventories, broad-based value decay is a real problem.  Long-time expert MTG vendor Michael Caffrey from Tales of Adventure put it best when he said "I am not in the business of buying risk -- I'm in the business of managing risk."  That sentiment encapsulates perfectly today's analytic outlook on our industry.

You may notice I omitted cards that were only expensive because there were like six copies in existence and once they got reprinted it became reasonable to get them at a power-level-driven value, such as:

  • Grim Tutor
  • Warrior's Oath
  • Imperial Recruiter
  • Jade Statue (Remember the outcry when this showed up in 9th Edition?  It hasn't shown up since and nobody cares and it's borderline unplayable and it's bulk bin chaff.)

You may notice I also omitted some cards that have been reprinted to a fraction of value, but did so in an anticipatable manner, and should be expected to be reprinted regularly, such as:

  • Fetchlands
  • Shocklands
  • Wasteland and derivatives
  • Commander-relevant mana rocks
  • Core 1CMC cards such as Brainstorm, Lightning Bolt, Dark Ritual, Swords to Plowshares, etc, at a lower value tier than the other examples.

I mentioned Modern Horizons 2 above and it reprinted the enemy fetchlands, which are all now the cheapest they have ever been since OG Zendikar was in Standard.  This is not a bad thing!  They are essential cards that will get played in any format they are legal, for as long as people are playing Magic.  It is good that MH2 made Scalding Tarn not be a $80 minimum ticket.  And for those who want to spice their collections up a bit, there are still original pack foils, BFZ Expeditions, and other super-premium printings now and again.  Knowing this, as MH2 propagated, most stores (including mine) made sure we had throughput on cards like the fetchlands.  But with a singles stock in seven figures of units, there was and is no analog way we can keep track of everything.  We had to turn to algorithmic tools such as TCGplayer MassPrice, which provide a clear benefit to vendors while also unfortunately providing exploit vectors to collectors.  The meta-struggle became keeping up with the exploits while letting the algorithm solve all the ordinary and mundane pricing concerns, which it largely does.

Note that I am not complaining or whining about the exploit factor; it simply is the way things are.  In business nobody will make special allowances for dealers.  It is up to us to adapt and make our adjustments.  In the case of DSG, the big adjustment was to sell most of our massive singles inventory quietly in the manner I described in the last article.  In the aftermath, as I hoped might happen, we've been able to rebuy up some beneficial tranches of cards, primarily higher-tier format staples, and we have been free largely to ignore everything else.

On a complete aside about that, I do believe that effectively fielding a comprehensive singles inventory (aiming for full coverage) probably requires robotic automation now, such as the Roca Sorter or similar devices.  Labor and space are simply too expensive today to have meatbag human beings picking endless white cardboard bricks, searching for cards above the listing threshold.  Caffrey, quoted above, was an early proponent of this automation and did some meaningful initial development of the process particulars for it; if you aren't already subscribed to his Patreon, I encourage you to consider joining me and many other satisfied members by doing so.

On a second complete aside.  I am going to change platforms for this blog in the months ahead, time and opportunity permitting.  I am still assessing which platform makes the most sense, as I hope to monetize the blog in order to make it more feasible to produce crunchier, extremely useful guidepost articles and deep analyses that game store owners and managers can better utilize to make money.  For logistical reasons I don't think Patreon fits my content plans quite right, though I may discover otherwise as I learn more.  The front-runner at the moment is Medium, but its monetization seems a little bit too byzantine for my autistic do-it-transparently brain to wrap around, so we'll have to see.

Enough with the asides, you might say, and that's fair.  I kept you waiting.  I will conclude today's Magic: the Gathering market thoughts by saying I am ordering roughly the same quantities for March of the Machines as I did for Phyrexia and Brothers' War, as the sell-through of Standard sets has been generally good since the policy change that opened up prerelease-week sales of all SKUs for WPN member stores.  You love to see it.  And now...

I have mentioned here on this blog now and again that it would eventually make sense for me to split my business between cards and video games.  Hence, "A Cell Divides," the prog-metal musical basis of which I will explain in today's coda.

A funny thing happened on the way to setting up the split, however.  

I had from the start expected that the split would be along categorical lines: Cards in one store, Video Games in the other.  This seems sensible enough, after all.  Do card players not seek out card-focused stores?  Do video game collectors not do the same?  Every impulse told us that this was the simple and correct answer, from branding and marketing prerogatives to the simple division of relevant stock, rack, fixture, and administration.

Something nagged at the back of our minds that this wasn't quite right.  And, ever the analysts, we nourished that doubt to see if it would grow into something more.

A single blog article is too limited in scope to accurately trace the years-spanning evolution of that analysis.  It might be something I embark upon as a long-scale project on the monetized future blog, I don't know.  Suffice it to say I am skipping some steps here and not showing my work.  But out of multiple key ingredients that led us to our ultimate answer, the breakthrough that made it all work was recognizing that our major categories have internal audience cohort divisions, and that those divisions line up across categories.  And moreover, that they continue to exist even as we extend to other collectibles categories, and that they continue to line up.  I realize I am being a bit abstract here.  This epiphany aggressively resists comprehensive explanation, with an almost violent obstinacy.  I'm punching it right in the sternum and it just keeps giving me the Ken Masters taunt.

"Fine, Bahr, whatever, just give me the answer."  The answer is that our business is dividing along the lines of our customer psychographics' engagement objectives, which flipped around from DSGs point of view become our store's engagement vectors.  Yeah, I swear I'm not just making words up at this point.  This is a real thing.  At least, I am gambling a lot of labor and overhead expense that it is.

Our existing store, Suite 12, will continue as Desert Sky Games.  What is Desert Sky Games today?  The primary engagement vectors are in-print booster boxes and packs of Magic and Pokemon at highly competitive prices, abetted by a second-to-none rewards points program called DSG Stars that is probably the single best promotion we ever initiated.  The secondary engagement vectors are a wide selection of out-of-print booster boxes and higher-end staple singles, plus a selection of higher-end video games encompassing both rare/hard-to-find and common-but-highly-demanded.  Did you know at less than $60, a copy of Mario Kart 64 lasts less than an hour on the shelves?  The game is almost thirty years old and has more than half a dozen sequels surpassing it and running on more current hardware, and also they sold millions of them.  And yet to this day it's one of the highest-demanded titles not just for Nintendo 64 but across all platforms, and it sells quickly despite being at a premium.  Mind-blowing.  Anyway, in identifying those engagement vectors, we came to realize how the split needed to work by recognizing what was left remaining.

Our new store, Suite 11, right next door, will exist for some amount of time as the DSG Outlet Store.  This resembles in many respects our long-time eBay store "DSG Closeout," and in fact it commingles that inventory so anyone who wants to buy our eBay stuff in person can finally do it seamlessly at our Suite 11 location.  However, Suite 11/DSGOS is not just discontinued or clearance merch.  It is the culmination of an idea I got from happy memories of years ago when I used to be into video game tinkering and modding -- the internal name for the DSGOS project for years was "Tinker With Games" -- and it was reinforced when I learned about places like Seattle's RE-PC and Dallas's legendary Computer Reset, which stood for almost 40 years before closing after the passing of its owner, the venerable Richard Byron.  While focused on computer hobbyists, both stores served console gamers as well.  There was something here, it finally came into focus.  

We realized that not only was there never a RE-PC or Computer Reset in Arizona that served the audience of console game tinkerers and modders, but that audience deeply overlapped the audience of "bargain hunters for video games and gear in general" -- and as discussed in last week's article, there was finally no more muddying of the waters within the bargain-hunting audience of the video game category because ultra-casual players who would have no interest whatsoever in tinkering or the collecting chase have largely moved on to subscriptions like Game Pass, PS Premium, and Switch Online, and no longer need video game retail of any sort.  And, synchronizing the meridians, the product mix that this engagement vector demanded happened to be deeply overlapped to the inventory we were having the most difficulty presenting in a cogent manner in the context of pre-split DSG.  Put a rare special edition Xbox One next to a PS4 copy of Stardew Valley next to a re-shell for a DS Lite next to a Sega Saturn that powers up but has a dead CD-ROM drive and needs an ODE installed... and what you get is a mishmash of product addressing high demand from four different audiences that have almost no overlapping interest in each other's target items.  But it's all the video games category!  Now, with a separation that's physical instead of just conceptual, we hope to serve each of those four audiences better.

Suite 11's DSGO, because it was already being used as our shipping office, will also serve as closeout space for discontinued TCG merchandise, so there will be bargains to be hunted for there.  We're going to be emphasizing having as much merch as possible, presented at low prices with constant updates reducing pricing as needed.  In fact one of the first big projects once we're already open is going to be taking the software inventory one system at a time and seeing how many games need to be tagged way down.  A good example that came up during the build was Sea of Thieves for Xbox One/Series.  For a long time the game held at the $35-$40 level.  It has more recently slid down into $15-$20 range on Pricecharting.  But the real value of this game as a functional thing is almost zero because it is free to play on Game Pass and it is targeted at an audience of mainly Game Pass or Xbox Gold users.  So in terms of who wants this physical disc copy of the game?  It's a small niche of collectors and archivers.  In terms of who wants to play Sea of Thieves?  Most such gamers can do so "for free."  Splitting the difference, we're going to be taking each copy of the game and pricing it at $8-$10, significantly below the Pricecharting value.  Collectors will buy them right up eagerly, and players weren't going to come in looking for it anyway.  This is just one narrow example of how the customer psychographic objective distinctions work on a real-world piece of inventory in hand.

There's a lot going on in the DSGO that won't make a lot of sense to people at first glance, so we'll need to be on our "A" game in teaching and guiding.  I'll have all the normal cables, adapters, and such for less common systems in the DSGO full-time to save room in Suite 12 for higher-demand inventory; it makes no sense to have a rack of Sega Dreamcast cables taking up space that could display another four colors of Dragon Shield.  I'll have kiosk, RGB, and refit hardware on hand, as well as an abundance of cheap replacement parts and parts consoles, and mostly you either care about that stuff or you've never heard of it.  I'll have movies from our old Suite 7 stock, dirt cheap, for those inclined to go physical rather than stream.  I'll have game discs that are too scratched for us to sell, but for which we no longer have a disc resurfacer, also priced dirt cheap for those who can glean some value out of them.  I'll have e.g. base consoles for XBox 360 Trinity chipsets for modders, and CECH-A01 PS3 mains that just need the revival process to become glorious backcompat daily drivers.  I'll have merchandising material like posters and banners for sale, for those so inclined.  We're going to sell off our custom cartridge cases now that Suite 12 no longer deploys stock in that configuration.  If all of this sounds a little bit vague, you aren't imagining it.  There is not a store offering quite like this in Arizona before now, and there has never been one in most parts of the country.  It's a novel experiment to some extent.

I say the DSGO "will exist for some amount of time" because honestly we don't know if this is going to work, or if so, in what manner it's going to work; and we have internal prerogatives that make it possible to try without being locked into a multi-year burden to do so.  (We didn't even have to buy a single piece of rack or fixture, since our Suite 7 assets were just sitting in storage.)  And if DSGO is a complete flop, we've left open the lines of play where we just recombine the stores and do something different.  That's the silver lining of opening the location one door's distance away from our current shingle, and that's the flexibility we get from cheap-as-free rent and low overhead and a stable financial position made possible by our big product wins from recent years, as discussed in recent articles here.  We can kind of do what the f*ck we want.  This is something we feel like trying.

The DSG Outlet Store should open by the weekend of March 11th, since that starts spring break for most students in our area.  DSGO will be open Tuesdays through Saturdays from noon to 5pm.  In a pinch we can fetch up stock from there after hours if you're visiting in Suite 12 and you know what you want.  Labor remaining a constraint, I'll be running the DSGO by myself some amount of the time.  There are no game tables and no public restroom and no buys in Suite 11, so a solo flyer can pretty much cover things.

Stay tuned for future articles where I migrate the blog to a new platform, and I wish all of you a very prosperous spring and a pile of money to be made on upcoming releases like Pokemon Scarlet & Violet and MTG March of the Machines!

Today's article title, theme, and concept, A Cell Divides, have been brought to you by Haken.  (Rhymes with "Taken.")  This mostly British progressive metal band is at the absolute forefront of the genre right now and is putting out some of the absolute best prog that has ever been.  Haken's big breakthrough came with 2013's "The Mountain," and the band avoided any notion of sophomore jinx with the masterpiece "Affinity" in 2016.  Both are highly recommended.  The song A Cell Divides is from their 2018 album "Vector," which is doubly appropriate with how much I talked about vectors in this article.  There also exist remastered releases of Haken's formative work from before The Mountain, and two newer albums have also released since, both awesome: early 2020's prophetic "Virus" and 2023's "Fauna."  More top song picks include Earthrise, Carousel, 1985, The Alphabet of Me, Crystallised, The Architect, and Cockroach King.  

Be assured that there is plenty for Haken to teach every entrepreneur reading this, as exemplified in Earthrise: "Evolve and we'll ensure our survival."  With that, until next time, resolve to carry on, everybody!



Thursday, December 29, 2022

World Coming Down

Sorry about the six-month break, there.  I was kind of preoccupied with a wedding.  But yeah in addition to that, business at DSG and in the greater hobby game industry overall has commanded my firsthand attention, and now that we're on the other side of a holiday shopping season that behaved almost exactly to forecasts, it's time to look back at 2022 and recognize how absolutely absurd this past year in the biz actually was.

The Pokemon TCG had nowhere to go but down, regressing to the mean but still well above the doldrums of 2017-2018.  The Pokemon experience of late 2020 and early 2021 was like a force of nature.  We literally got to the point briefly in December 2020 where we had no booster boxes on the shelf.  And it wasn't for lack of ordering enough, or for underpricing!  Demand and sales volume were simply that high.  Anything we could get was snapped right up.  Our biggest Pokemon days have been the releases of Battle Styles and Evolving Skies, both of which happened in 2021, but we had great revenue on the likes of Brilliant Stars, Astral Radiance, Lost Origin, and Silver Tempest in 2022.  Looking forward, we see Pokemon as a mainstay of our business in a way that it never was pre-pandemic, but because of that extreme volatility, we don't ever want to have to pay the bills with nothing but the 'Mons.  Our chips will never QUITE be all-in on the table with Pokemon the way we did for Double Masters 2022 or for products like Time Spiral Remastered before that.  Of course, I say that with two behemoth releases inbound in the next three months alone: Crown Zenith and the Scarlet & Violet Base Set.  Bring it on, Nintendo.

Video games had an interesting descent to normalcy after stores like mine all got cleaned out during the pandemic.  We're still not readily able to stock Playstation 5 or Xbox Series X systems on demand, which is just as well given that new systems are breathtakingly margin-free and exist primarily to drive trade-in volume.  Nonetheless, we sold a lot of Nintendo Switches, including the new OLED versions, and at no point in 2022 were we out of stock entirely on them, to my recollection.  

Previous generations of systems slowly returned to stock, at levels I'm not completely happy with, but which are adequate.  We stopped taking in most optical disc systems since the drives are starting to hit very high failure rates, much the same as automotive CD stereos from the 2000s are all breaking down now.  I'll be intrigued if future years pose a big challenge for nostalgic Xbox 360 or Wii players hoping to enjoy license-locked and de-listed titles marooned on those platforms and unavailable via more current means.  Meanwhile, on any given day, we can typically fill a nostalgic millennial's order for a Nintendo 64 or Game Boy Advance with some carts and controllers/accessories, and those are great tickets so we're always going to bend over backward to make that visitor happy.

The operative progression in 2022 in the video game category was toward subscriptions and away from everything else, which has implications for brick-and-mortar retail as you might suppose.  The most successful subscription service is Xbox Game Pass, and verily, Xbox One/Series physical disc media is among the lowest-selling software in the store, ranking below even old Sega stuff.  Our sweet-spot software inventory across Nintendo systems, older Playstation, and the vintage platforms, grew steadily all year, which might be a function of good buying volume on our part or might be a function of demand plummeting... and is probably some amount of both.

I have stated before that the video game category would sunset some day and the business would change.  It's not that we wouldn't be able to sell any video games, but that the focus would shift from players to collectors.  Bread-and-butter gamers who seek bargain value at stores like mine and then trade games back in when they finish them will find their needs served by Game Pass and the other subscription services -- and as of November 2022, a staggering thirty million gamers are doing exactly that.  In the course of the Microsoft-Activision-Sony hearings, we learned that over 28 million subscribers are on Game Pass, with another 1.5 million apiece on Playstation Plus and Nintendo Switch Online.  I think players will still be with us for a while yet, because so many thousands of absolutely awesome titles are still, to date, marooned on older systems and media.  However, if there is a profit to be had, those titles will find their way to present-day markets, which we have seen broadly on platforms like the Vita and the Wii U, where virtually every consequential game has arrived on Switch or is eventually expected to.  Thus, in the future beyond when players need local independent video game stores, only collectors will be seeking our channel, and that is the absolute worst audience to serve.  There are some angels amongst the collector public, but the vast majority of that audience in the video game hobby are extremely anti-store in general, have already acquired all the common titles they want, and will seek only the rarest fringe of inventory, and whine like a mule about price while knowing full well it is fair market value; they just hope the store is stupid or desperate.  Yeah, I'm not looking forward to dealing with that.

Oh, lest I forget.  The Magic: the Gathering singles market collapsed.  Or, more accurately, it is still collapsing.  Around three months ago we started to see discussions on the MTG finance social media groups and subreddit that indicated that this collapse was finally being noticed by others.  Griffin and I noticed it late last year and acted accordingly, and our reward was a six-figure cash payoff, literally.  The canary in the coal mine for us was not the pace of reprints in products such as Modern Horizons 2 or the Secret Lairs, though neither of those helped.  Rather, it was seeing literally hundreds of Commander reprints every six weeks as new Standard and Commander Legends sets included multiple Commander decks and a refreshed List to top it off.  With Arena killing paper Standard and Commander predominating in the meatspace game world, that reprint cadence produced a glut of singles in needlessly duplicative catalogue nomenclature.  (Weirdly, the List was the more sustainable part of this, as a card that repeats exactly on the List is identical to its previous Mystery/List printing and does not create a new duplicate SKU.)  TLDR version: Singles became virtually impossible for players OR STORES to keep up with.  The bough broke.

Using tools such as the TCGplayer inventory reporting, CSV exports, Massprice, and Griffin's coding acumen, we observed that there was a vast "middle" of cards that was crumbling into dust.  I only wish we had noticed this a year sooner still.  Singles like Vendilion Clique and Containment Priest are great examples of once $20-$40 all-stars that are now literal bulk dollar rares.  DSG's inventory of over a million cards was seeing an internal erosion that was frightening in its magnitude and threatened to undermine the asset component we had spent years building.  We utilized our software tools to carefully adjust tranches of cards to an amount near Direct Low, typically above Market, and well below our typical pricing near Listed Median.  (This was after segregating our $100+ Reserved List stock.)  Then, we began a gradual process of ratcheting down the price one percent at a time every few days.  This resulted in a grinding effect where we basically sold enormous amounts of cards, at quite literally the highest price we could get at the threshold of immediacy, given no announcement, no fanfare, no outward sign that we were doing anything.

Over the course of months, the money rolled in and the cards rolled out.  And a corollary effect occurred: Our labor cost to manage singles, previously masked by the ordinary course of fulfilling Reimbursement Invoices, became clearer on the ledger.  We were able to see the tremendous waste caused by time sunk pulling Pauper Commander lists.  We were able to count just how worthless it was to open singles at set release with the glut of reprints forcing values down.  It went further than that, but you get the picture.  Waste in the form of inventory decay, waste in the form of inefficient labor loads in the task processes, waste in the form of accounting for it all.  A fortune passing us by and right down the drain, previously offset at scale by the main singles revenue level, but no longer sustainable with card values collapsing.

Once we figured we'd sold down enough, leaving 10% for the next guy as we were taught to do, we sold off the rest of our sub-$100 cards to other vendors.  Don't cry for them; they got a smashing deal for an enormous hoard of cards, even at the New Reality value levels those cards had fallen to by that point in time.  With our new-found labor savings, we were able to reduce again the price of sealed Magic product to levels that others in town really can't keep pace with, without resorting to subscription gimmicks and the like.  With our space freed up, we have yet even more future projects incubating.  I look forward to, eventually, discussing them.  We still deal with high-end singles and that has been awesome, with the exception that we're upside-down on some of our best-condition dual lands because of how competitively we've been buying on them.  We don't mind waiting for the market cycle to rebound, as it typically does in late spring as tax refunds propagate.

The singles sell-down contributed to our cash position that let us barge in heavy on Double Masters 2022 as we had planned.  That set is indicative of the overall trend for Magic in 2022.  It was great out of the gate; so great, in fact, that I literally bought a sports car with the profit distribution from the release cycle.  But it slowed down and now I have probably a three-year supply remaining, including cases upon cases of both draft and collector boxes.  The market price of the boxes has dipped back toward pre-order levels, and I don't feel like selling them that low, so as with our cleaner duals and RL staples, we're just going to sit on them until the sun comes back out.

The big benefit of the MTG singles collapse is that it will eventually bottom out.  Some of my peers say they think it has already happened.  From my analyst perspective, I haven't seen enough longitudinal data to say whether they are correct or not, but I would like them to be.  Throughout the trough cycle, buying opportunities will abound for any store in a strong cash position, and right now, that's us.  We know there's at least some amount of haves-and-have-nots in the scene, with one day earlier this month bringing us news of FOUR game store closures, two of them local.  (I know I haven't worked on the game store closure list lately.  I'm kind of hoping GAMA will take it over.)  With singles values in the dumpster, buying great collections for a song should be possible, even at competitive levels versus the marketplace.  I think values will behave a little differently in the recovery now that people know the pace of card prints and reprints will continue to accelerate, but that players will still want to play.  I have a notion of what the cold equations will look like in that market.  But for now, we're all just engaging in educated guesswork.  I expect to be in the Magic: the Gathering business for as long as DSG exists, so it's a puzzle I had better be solving as we go.

TCG Accessories were dumb in 2022.  We made money on them well enough, but it seems like every accessory brand went ultra-wide and it became kind of pointless to attempt comprehensive coverage.  The best practice in this industry is to be an arms dealer and play no favorites, offering any accessory a card player might want, and accepting that the vagaries of shipping out of China would cause periodic outages and blurps in selection from the customer end.  I decided to take a different approach that might end up being wrong, but it's an approach that satisfies my autistic brain: coverage of a narrower range of brands, basically just Dragon Shield and Ultra Pro, but trying to keep every color sleeve in stock as close to 100% of the time as possible.  I have been carrying Ultimate Guard also but I'm contemplating dropping them.  Players still like Boulders and Sidewinders, kind of, and used to love the Arkhive series of cases since Boulders and Sidewinders are designed to fit inside them in a modular way.  But now there are umpteen different kinds of Hives... Arkhives, Minihives, Superhives, Treasurehives, Omnihives, and on and on.  And that has diluted demand to where most of the Hives move too slowly.  I have racks upon racks full of them.  Meanwhile popular colors of Dragon Shield can sell a master case worth in a week or two.  I'd rather devote limited shelf and storage space to deeper stock of those.

Meanwhile of course inflation has socked us all in the junk like a load of bricks.  And if you're going to argue that inflation isn't real or that Putin is to blame, get outta here with that nonsense.  A staggering 80% of all dollars in existence were printed in 2020 and 2021.  That is a sure-fire recipe for an inflationary bloom.  Collectibles that experienced an easy-money spike in 2021 at the front of that cycle fell back to earth in 2022, but costs of living didn't.  Interesting how that works.  Thus and so, players saw their discretionary money reduced, and they cut back spending accordingly this year.  DSG survived well enough thanks to hedges upon hunkers upon consolidants; one might accurately say that the focus of my personal Year 2022 was to reinforce the value of the business's asset base in its various liquid and illiquid components, much of which work was not public-facing, and a little bit of which I discussed above.  This was a terrible plan if we thought the year would boom, and a perfect plan if we thought the economy would suffer a heroin hangover from 2021's inflationary high.  And, well, we were right again.  Damn it feels good to be an analyst.  (link absolutely NSFW)

"Why is DSG not a WPN Premium Store Yet?" is a question one might reasonably ask, and the reality is that I might abandon trying for lack of time to allocate to what has proven a very subjective and indefinite process.  DSG's main store isn't quite set the way I want it yet, but even just short of the goal line, it is already one of, if not THE, most beautiful game stores in the entire southwest.  I have some finishing touches in the works and in progress that should hammer that reality home pretty solidly.  In fact, just in the course of iterating toward our configuration prerogatives in the wake of the unexpected fire and store move from 2021, the store turned into the cozy ultraboutique that Wizards usually prefers for Premium.  The store really should just be made Premium as it stands.  It's there.  However, our original WPN representative kept finding additional things for us to do, and then he left the company and our new rep hasn't worked with us yet (and we haven't had time to work with him anyway).  Ultimately, this entire situation might just be a casualty of priority.  While I'd appreciate having the credential and getting the associated perquisites, DSG's Premium application taskwork simply hasn't risen into the top ten on my ongoing List Of Things That Are The Best Thing I Can Do Next since at least late 2019.  And as Canadian retailer Ted Yee correctly observes, the only thing about a store that really needs to be premium in the end is that store's bank account balance.

Anyway, I hope you emerged from the riptide of 2022 healthy and intact, and I wish you all the best of health and prosperity in 2023 and onward!  We have a lot on our agenda and as per usual, we're going to do it without explaining ourselves, perplexing the haters and intriguing our competitors, and ultimately (if we succeed) achieving advantageous position in the market.

Today's blog article theme song, "World Coming Down" by Type O Negative, pertains to the foregoing only in the grammatically literal sense of its title.  The actual song is a masterpiece of gothic metal introspection on the nature of masculine vulnerability and brutally honest self-reflection.  It might be the best thing Peter Steele ever wrote, and the world remains emptier for his unfortunate absence these past dozen years.

Photo (C) Joseph Coultice


Monday, July 18, 2022

Double Agent

Desert Sky Games is approaching the ten-year mark in business, and most processes are approaching the point of being solved by now.  However, the market still moves and shifts as it likes, and it's up to us to adapt to that, or not.  We think we've adapted in a rather brutal fashion, and in the meanwhile moving forward behind the scenes, skating to where the puck is going to be.

Shortly after the success of Magic's Kamigawa Neon Dynasty release to start the year, we decided to plan our shots with what looked like a saturated release schedule.  This was before knowing Unfinity would appear in October, or that Warhammer 40K Commander Decks would delay from August into October also.

We loved the deco-noir motif of Streets of New Capenna and we expected (and got) shard triomes, so we expected ordinary business with that set.  Normal ordering volume.  In practice, what happened was that the set landed a little on the soft side, but it was within what we could afford and we saw only middling distress from the weaker competitors out there.

Commander Legends: Baldur's Gate (CLB) was something of a wild card at that point.  Collector booster boxes of the original Commander Legends set (CL1) skyrocketed in price and remain to date the only source of extended-art foil Jeweled Lotus, Vampiric Tutor, and various other cards.  At the same time, the main set would be in print for at least a year and we knew we could come back to it.  It made sense to go heavy on CLB if we didn't have anything else to be ready for, or risk missing another CL1 scenario.  Stores that were hurting from New Capenna were doubly vulnerable.

Of course, you all know what happened after that.  The very next release on deck, July's Double Masters 2022 (product code 2X2), projected as a runaway hit even that far back.  For August, the Warhammer decks were fixed (not a booster product) so would be a minor spend in all likelihood, and we have a 10th Anniversary celebration to be ready for as well.  We set our sights on Double Masters as our big "play" of the year, long before CLB ever came up for distribution number lock.

So, every store ordered 2X2 obviously, but we suspected most stores did not take our deliberate approach to it.  Knowing we wanted to be in and out of CLB quickly, we halved our expected quantities for what ended up being the flop of the decade thus far.  Stores around town are, even now, absolutely choking on Baldur's Gate, which landed sparse on power and missed at least one obvious reprint in Dockside Extortionist, which appeared instead in 2X2 where it wasn't needed to sell the set.  Meanwhile, we had no particular issue clearing CLB ahead on money, even though our hedge was still not enough, and we do still have quite a bit of excess stock.  It will be fine in the long run as the set becomes the Ancient Dragon Lottery for customers, but let me be very clear when I say CLB is the worst-received product in modern Magic history, since at least Global Series Mu Vs Jiang, and the worst-received booster set since Born of the Gods or maybe even Saviors of Kamigawa.

Looking ahead to 2X2 then, in addition to ordering low on CLB, we tapered down our general restock volume and started hoarding cash in advance of what we expected to be a large spend on Double Masters.  We wanted to be able to buy absolutely every last box we could.  Even after how well things went, I wish I had requested twice as much.

The final secret sauce was not taking pre-orders.  Most stores float from release to release on net terms, whereas since last summer's sudden store move settled out, we had managed to normalize cash flow to the point where we could be paying cash up front every time if we had to.  Your usual store will take pre-orders to make sure they can cover terms, and if business has been soft enough, they'll pay existing expenses from pre-orders and count on later transactions to cover open terms invoices.  Lord knows during the doldrums of 2018, I ended up having to do that a few times.  People love Rivals of Ixalan now, but nobody loved it when it first arrived, let me inform you.

Not taking pre-orders also let us avoid the inevitable race-to-cheaper optics war that happens out of the gate before spoilers, where the people willing to give a game store an interest-free loan the soonest, get to lock in low pre-order pricing relative to the set's release demand/market.  There isn't much risk to the consumer because if the spoilers suck, they can just cancel the pre-order.  The risk to stores is that the set won't be popular or will get overprinted, or on the other side, that the store will give up a bunch of revenue in order to have fast cash up front.  Based on the previous Double Masters set's success, we did not expect a bad product, and we didn't need the cash advance.

So there we were, all expenses paid and money ready going into July, and sure enough, the market price of 2X2 climbed to where we could offer best-in-town pricing and STILL make $100+ more per box than we would have at the beginning of pre-orders.  There it was, the gold ring we were grabbing for: setting up to make this release as beneficial as possible, using the power of patience.  Friday, July 8th set a new store record for daily sales before we even hit the 90-minute mark.  We ended up more than doubling the previous record.  Then Saturday, July 9th hit the top 5 of all time.  Then the following weekend we had two ranked days, an accomplishment that gets harder every time because the threshold to be on the rankings goes up.  We have fun plans for that revenue.

Even now as most local competitors have sold out of 2X2 product and are scrambling for fundraising schemes, and even as we enjoy fantastic release-week sales, we sit atop a massive hoard of 2X2 and it's all long since paid for.  We will be selling this stuff for months.  Longer, if we have our druthers.  We will ride the market price all the way up to the moon as we go.  Every box and pack we sell will be better than the last.  And when the cupboard is dry in the metro, only the behemoths will still have stock: DSG and probably Amazing Discoveries and Play or Draw.

The MTG price hike that goes into effect with Dominaria United in September isn't going to make us blink, and based on the logistical success of our 2X2 play and the colossal labor savings from doing it this way, we are going to come out of the gate for DMU with best-in-town pricing and no pre-order requirement.  Plenty of product will be available, just come in and buy what you need.  We hope to cause further distress to competitors as local players cancel pre-orders with them (or force discounts) knowing they can get their boxes from DSG for less on prerelease day.

Lest this blog article sound too gloaty, I should really explain the context.  For a number of reasons, not the least of which is my autistic personality that is the exact opposite of the gregarious extroversion more ideal for store owners in this industry, DSG has long been the local easy target, the store that gets no benefit of any doubt, no leeway for any mistake, and maximum pressure from any competitive move.  It got pretty onerous as time went on, and surely embittered ownership toward certain specific antagonists.  One of the lessons you learn in law school is that if you're going to punch someone back, do it hard enough that they will have a difficult time getting back up.  We took that lesson to heart throughout these years of scuffles and skirmishes.  Rather than simply fighting tit-for-tat, DSG turned inward and changed our position so that we could win outright, sustainably, on the exact aspects of business where our adversaries thought they could most easily crucify us, and were themselves the most vulnerable to reprisal.  This is not an unprovoked or unilateral attack by us in the great ongoing war of Business.  Rather, this is reprisal, a delivery of comeuppance.  It is a sort of justice.  They threw the first punch, but we intend to throw the last.

Probably the best part of all this, is that most of our current business initiatives are not externally visible, and are the greater part of what's really going on.  Our entire 2X2/DMU operational shift was just one of many things, and yet it has been so visible and so successful and so effective that I can even state right here in print that it is not that important in the grand scheme of things, and it doesn't matter!  Competitors cannot ignore it in the analytical calculus regardless!  That is OUTSTANDING strategic positioning.  It's a play-action pass on first-and-goal from the 1-yard line.  The defense cannot play both the run and the pass effectively, and is overwhelmingly likely to be scored upon.

Thus derives this articles title, Double Agent: our hat tip to the wonderful and profitable Double Masters, but also to how we've managed to set this up to achieve both goals of succeeding on its face, and disguising from competitors most of what we are really doing.  We wholeheartedly recommend the Rush song by the same name for your listening enjoyment.



Sunday, May 15, 2022

Enjoy the Silence

I do owe my readership an apology.  I have been extremely sparse about new blog articles.  Some of my deadbeatery is excusable -- I do have a wedding coming up this fall, after all -- but part of the reason I haven't been writing is a deliberate decision that is tied to business prerogatives.  And not to be too meta, but that itself seemed like a pretty decent idea for an article!

In an absolutely great interview session with finance YouTuber Graham Stephan, automotive YouTuber Doug DeMuro explained that he keeps a grueling schedule of content production despite already earning plenty of money, because he doesn't know when it's all going to end, so he feels motivated to max out the earning capacity of this window of opportunity while it stands open.  That is to say, the boomlet of social media whereby a YouTube channel is, for this moment in time, a lucrative option.  Indeed, an extremely lucrative one if you managed to get situated right.  But it can't last.

Doug is absolutely on point with this.  Windows of earning opportunity are often a combination of preparedness, awareness, discipline, ruthlessness, and luck.  They can close without warning or remorse.  YouTube seems like an earnable conduit right now, but what happens when it's not.  It can absolutely happen.  For example, already Facebook provides far worse advert metrics than Instagram for the same content DSG puts out, for the reason of I have no damned idea.  It just does.  (Paid advertising campaigns on either platform feed through to readers on both.)  What happens when YooToob becomes "lame" and the earnings center-of-gravity for videos is on Twitch or (sigh) TikTok (in which case I'll be missing it because f**k that noise).

The situation for Desert Sky Games is a little bit broader and more general.  With the exception of a couple of blips now and then on the schedule (Innistrad Crimson Vow and Pokemon Fusion Strike, more or less), we have been on an absolute earnings tear since spring 2021.  I have barely taken any days off through this entire duration, not to mention during which we had a fire, a store move, and almost complete turnover of staff.  The bottom line is that most business is booming and on any given day or week I don't want to miss the chance to capture peak earnings, so I spend an inordinate amount of time doing "store stuff."  Pokemon is off its 2021 peak, but is still much hotter than the doldrums of 2017-2018.  Magic is a torrent of product that we can almost, kind of, keep up with.  Video games have been on absolute tilt ever since March 2020 and who even knows when that will slow down.  I've been pricing systems at above the pricecharting rate and they still sell as fast as I can prep them and get them staged.  Meanwhile on the buy side I've been turned down offering 75% of pricecharting in cash for Nintendo hardware, usually a severe overpay, and right now it's not enough.

Meanwhile, owing to the pandemic and the nursing shortage, Hannah, who is a registered nurse working overnights at a local hospital, has had the opportunity to bank massive bonuses taking extra shifts, and for that matter is in a profession that keeps getting market increases for her regular wage, so even though the work is pretty strenuous, she doesn't want to miss a peak earnings window either.  There are stretches of days where we complain that we miss each other.  It's a hell of a grind.  But wow, we feel pretty good about the bankroll we've been building.

There is roughly a two-week cadence to our work right now where Hannah and I spend mutual work days working, then we have one weekend with the kids where our non-work time is spent with them, then there is a day or two of relative downtime that we spend with each other (and also do household stuff, which is mostly the lowest priority) and then during the second weekend when we don't have the kids, we both work again straight through.  Essentially, any night when she's at the hospital, I put in extra hours after closing in the dark store, because my tiredness is offset by the ease of productivity in the peace and quiet.  I'm not inclined to just go home and stare at the cat, as cute as Store Kat may be.

This is also part of why DSG isn't a WPN Premium store yet.  Every time I send a new video, they send back a punchlist of what should be minor projects, but I just can't justify spending time on any of them when working on the store's existing deliverables earns me way more money and incurs less transitional friction.  Writing, which in the abstract I always want to be doing, is similarly outranked by monetizables.

The foregoing makes me sound like quite the money-grubbing greed merchant, but what I'm doing is really a far more conventional diligence.  The reality is that small business retail in the comic and hobby game industry isn't a career with a clearly shaped future.  We know sunsets are ahead for each of the three main things DSG does (video games, Magic, and Pokemon) but when those sunsets are going to hit, industry-wide, is a moving target we can only speculate.  And I think general tabletop is far worse off.  If you forced me to pick a year, right now, without any caveats, when the business model that DSG is running will become untenable?  For a variety of reasons, I'd pick 2028.  (Six years ahead, as of this writing.)  And I'm concerned I've placed that date too far ahead.  But let's just say 2028 for the sake of thought exercise.

Now think about your own career.  If a little bird told you, credibly, that you'd be fired six years from this very day, and nothing you could do would prevent it, and moreover your industry wouldn't be a viable income source anymore and you'd end up having to move on to some sort of adjacent work, and you can't yet know exactly what work that would be, and you were being offered unlimited overtime at double, maybe triple wage here and now today, what would you do?  I imagine you'd make hay while the sun shined, right?  You'd pick up every shift you could.  You'd cancel vacations, you'd put hobbies on ice, you'd quit the neighborhood bowling team, you'd stop going to church, maybe.  After all, God helps those who help themselves.  And you'd do ten years worth of work in five, and probably spend that last year winding down and organizing your transition out.  And you'd be financially well situated when the clock struck midnight, and that's exactly what I want for me and Hannah and ultimately for the kids.  

I decided decades ago that if I ever had the chance to compress a career like this, I'd do it.  "If you could work your ever-living ass off for ten years but then retire, would you?"  Absolutely the f**k yes.  In fact after a break during the early months of retirement, I'd surely find my way back to productive endeavors, not the least of which would probably be writing.  But just because I was willing to run that grind didn't guarantee that I'd get an opportunity to actually try.  I had preparedness, awareness, discipline, and ruthlessness, and now the video game and Pokemon booms and Magic's high-voltage itinerary are the luck that the recipe called for.  My championship window is open.  It's right there.  I have to take it.  And that means, unfortunately, instead of reading interesting industry repartée here on The Backstage Pass, I'm afraid most weeks for at least the rest of 2022, you'll just have to enjoy the silence. :)

Since my blog articles intentionally use song titles now, I would be remiss if I did not link a great rendition of same.  I've never been a Depeche Mode listener.  I can appreciate them on a technical level but their performances just do nothing for me, for whatever reason.  But compositionally they did a solid with Enjoy the Silence, and I can't pick between two splendid covers of the song, the first by piano prodigy Tori Amos and the second by goth-metal groundbreakers Lacuna Coil.  Words can be so very unnecessary, but I give them more credit than only to harm.



Saturday, February 26, 2022

Get On This Deck!

I never thought global war would be a real possibility again in my lifetime, but here we are.  Last week, Russia invaded Ukraine, my family's ancestral homeland.  

That's right, I am of Ukrainian descent.  I was originally a Rossman, before that an Ursuliak, and follow an immigration trail from my present-day home in Arizona to the Great White North of Alberta, Canada, to whence traveled the family from Ukraine in 1903, three generations before me.  (I am in the 4th generation of American Ursuliaks.)  Fun fact, Ursuliak and Bahr both mean "bear" in their respective root languages.

But enough about my grizzly bloodline.  Anyone who knows me knows that one of my life causes is fighting against bullying.  The Russian invasion of Ukraine is about the most gargantuan bully move that has occurred in many years.  Even if I had zero ties to Ukraine, taking Ukraine's side in this war is a very easy and obvious moral decision.

That's where The Backstage Pass comes in, because it turns out two of Magic: the Gathering's all-time good guys in the Pacific Southwest, Dave Magenheim and Adam Romney, are ponying up in support of Ukraine and have set up the means for Magic players everywhere (and, indeed, anyone else who cares to join in) to do the same.  I am on board and I hope my platform here, humble as it is, may provide some amplification.

I'll let their words serve as the best explanation for this campaign:

We're asking MTG players everywhere for something small: buy one less pack and send the five bucks to Ukraine. Then tell your friends to do the same.

On the first day of Russia's invasion of Ukraine, thirteen brave soldiers found themselves surrounded and defenseless by the Russian Navy on a small island in the Black Sea. After firing on the island, Russian warships demanded their surrender. These true heroes of Ukraine recognized Snake Island as their personal Alamo and refused; responding "Иди на хуй!'" The precise translation is not suitable for a family fundraiser, but serves as our inspiration and our calling to the community:

"Get on This Deck!"

Buy Ukraine a Pack. Honor those Legends.

Our starting goal is for this community to cover the cost of a case of cards - equivalent to two months salary for the average Ukrainian. Your small sacrifice will go a long way. 100% of donations go directly to United Help Ukraine - which distributes food and medical supplies to Ukrainians affected by the Russian invasion.

We are not in any way affiliated with Wizards of the Coast ... but we'd like to be! We've given you money for years Hasbro; it's time to send some back.

GoFundMe Link HERE.

I vouch for Adam and Dave without hesitation.

Morale on the ground in Ukraine is very high right now.  Unlike Russians with their unfortunate fatalist mentality, Ukrainians are a scrappy, self-determined lot, and are used to having to make their own way and solve their own problems.  Ukrainians are thrilled to know that anyone, anywhere, especially Americans, are taking their side, whether in material form or otherwise.  Obviously the material form of taking their side is the form that's going to help the most directly.  And since most of us aren't in the munitions shipping business, we then turn to financial support as an effective means.



Friday, July 16, 2021

Take Hold of the Flame

On the afternoon of June 19th, we were having record sales for the fifth day in the last ten, with a house full of players for the Modern Horizons 2 release weekend, in a 6k+ square-foot store that was approaching end-of-lease.  If you had told me at that moment that the store would be closed for the rest of the month, I would have laughed at you.

Less than 30 days later, we re-opened in just under 2k square feet, in a gorgeous fully-renovated suite on the other side of the same building, where our lease is renewed through 2025 at an occupancy cost so much lower that it's practically operating for free (and for the short term, "practically" is more like "actually").

But wait a minute.  Hadn't I posted right here on this blog that I was 95% confident the store would remain where it was through 2022?  (Amusing that in that same article, I forecast a "pandemic" as one of the "apocalyptic" scenarios that might throw all assumptions out the window.)

So what happened?

Fire.  Fire happened, and a supportive landlord who was willing to work with us to turn a loss into a win.

For a week in mid-June, a heat wave blasted the Phoenix area that was so onerous even we locals were hatin' life.  DSG had HVAC interruptions, brief outages, and other unpleasantness.  We even shut down the vintage arcade for a few days to try to reduce the power load.  Sometime around 7pm on June 19th, the heat blistered our external power junction assembly, and a bad connection arced many amps of power into ignition.

We cleared the store of guests and nobody was harmed.  It is testament to the great construction of our building and the safety measures therein that the other power phases continued uninterrupted despite a literal electrical fire burning inches away from their connection points.

Alas, the fire destroyed the entire junction, and replacement took weeks of parts procurement and installation, followed by weeks of city and utility certification before the suite could be used again.  (As of the publication time of this article, it was still not done.)  DSG faced a potential business outage right in the middle of our hottest streak in company history.  In fact, despite being closed from June 19th to the end of the month, June still came within a few percent of being our biggest month ever, and instead sits in second place behind March 2021.  The stakes could hardly have been higher.

To our immense fortune, we had already been working on our exit plan from Suite 7, which was approaching end-of-lease, as I mentioned earlier.  The other partners and I had spent months sketching out the branches of our potential site scenarios.  Through this preparatory work, we had already reached a provisional agreement with the landlord to move to Suites 11 and 12 for our lease renewal, but it was supposed to happen months into the future, closer to the Suite 7 lease terminus.  The landlord already had an inbound tenant signed on for Suite 7 who was ready to start construction whenever we happened to be out of the way.  We all figured late 2021 or early 2022 would be Go Time.

When the fire occurred and we learned how seriously it was going to disrupt business, we were able to amend the agreement with the landlord to just proceed with the move immediately, and give the inbound tenant a chance to get started and pass through Permit Hell sooner.  The inbound tenant was thrilled.  I can't disclose their business since that's not my information to share, but the entire DSG crew is looking forward to it being there, and we will be eager customers.

Moving immediately meant doing things on a tight calendar and some extra expense from not being able to slow-walk some of the renovations, but thanks to this spring's stimulus boom, we were positioned sufficiently well to proceed using cash on hand, and insurance is going to defray some of that cost later.  And we sharply minimized lost time.  I cannot stress how different this move has been from the last one, which ran way over calendar and way over budget and required us to borrow an inordinate amount of money at lousy interest rates.  This new move required us to borrow zero dollars and zero cents, and on top of that, again, insurance reimburses some of the expense.

So there it was.  We had a plan already in place, and what the electrical fire let us do (or forced us to do, depending how you look at it) is start before we were ready, and finish before we had preferred to, but ultimately move forward right away and reap the long-term benefits of that.

The MTG Forgotten Realms prerelease stood as a pretty hard calendar milepost that we didn't want to miss.  Under the original plan, we'd have hosted that and one or both of the Innistrad events from this fall in Suite 7, and then we'd shift all activities to the new suites seamlessly between major dates.  Instead, after coordinating with Wizards of the Coast and getting the appropriate permissions, Forgotten Realms became the first event in Suite 12.

We know the new location is smaller.  I've been telegraphing pretty heavily here and elsewhere that something like this was going to happen, so it's worthwhile for me to give some insight here on the business aspects of reducing our store footage in this manner and the business reconfiguration that goes along with it.

Having the largest store in the Valley was fun, but in many ways it was overkill, and it absolutely was not cost-efficient.  We had a huge and happy player base, and Suite 7 was certainly big enough to accommodate them, but during the long slide of tournament indifference that preceded the COVID pandemic, we discovered that it wasn't necessary to have that kind of capacity, since that river almost never ran bank-full.

Indeed, even at our fullest, we never even reached 50% of our imputed maximum occupancy.  Over the years, I had to get really creative to monetize surplus footage, and that's part of why Warhammer and D&D lasted as long as they did despite the organized play deployments for both categories failing to perform sustainably.  I had more space than I could fill, so things that were using that space inefficiently got a partial pass.  That partial pass finally expired when growing business components started making more beneficial use of that space, such as our TCG singles processing office.  It started to make sense to take those categories out of the equation if we were not situated to be top-tier in them.

That said, we are still positioned to serve the lion's share of our everyday player volume from before.  Obviously it will be a bit of a pinch at prerelease time, since we routinely seated double or triple our typical FNM player counts for that.  We've got about a 48-player max in Suite 12, and we can stretch that from time to time to about 64 players using additional space in our section of the plaza, including parts of Suite 11, once we've had time to set that up.  (We only need seating for 32 players to host WPN Qualifier events, if those ever resume.)

More importantly, we are poised to do a far better job serving our players than we did before.  Suite 12 has been fully renovated, from newer LED ceiling lights to awesome stone floors, and it's beautiful and comfortable.  Our WPN Premium application is already on my itinerary.  We hit a jam with the new tables we had planned, our understanding was that they were about three inches wider than needed (good) but it turns out they are three inches narrower than needed (not good).  But we still have the eight-footers in place with sweet covers and comfortable space around.  And obviously our HVAC system will have fewer cubic feet of space to cool during the hot summers.  Meanwhile, singles processing in its entirety takes place in Suite 11 and requires no additional steps from the player.

We have been telling the regulars who ask, that there is a long term plan in progress and it will make sense as the final pieces fall into place.  We're definitely at the 80%-85% completion level now, with only a handful of major moves (each containing its own array of sub-moves) remaining to get DSG to where we believe it should be.  It should all be starting to make sense now to those of you who have been observing all along, though you'll gain even clearer insight as we push those last few building blocks into place.  The recent "Great Narrowing" of DSG's focus from full-spectrum hobby gaming to just video games, Magic, and Pokemon, explained at length in various articles here, was a prerequisite condition to a broader structure of efficient facility deployments, starting with the one we've built now in Suites 11 and 12.  We've been working on, as I put it in a previous article, "steering the store's cone of influence to a narrower range of things, so we can craft an offering that is increasingly 'no excuses.'"

Before the move from Gilbert to Chandler, we had maxed out a 2400 square foot suite and had our Tempe location also on lease wind-down at just over 3k square feet.  The 2017 lease for Suite 7 was cheaper than both Gilbert and Tempe combined, and also larger than both of them combined.  It seemed like it was a complete win on all fronts.  Instead, we found ourselves out of position.  We had been running a Mario model that suits rural and mid-major areas well, spreading a wealth of categories and play space to cast as wide a net as we could.  While we were busy with steep efficiency challenges in an attempt to be better than a jack of all trades and master of none, in our major metro region, laser-focused smaller stores took leaps forward and proved to be running the better structure.

In fact, the Bahr Haters out there now get to experience the one thing they wanted the least: a DSG with near-zero overhead that can exert tremendous competitive pressure on them through pricing, supply, and our ironclad reputation for doing everything above-board.  Feel free to throw in the towel and close up any time you're ready.  (This is especially sweet after how some of them stoked the rumor mill during our closure suggesting that we were done for.  Yeah, you wish.)

Since the impetus for our big move forward amounted to us essentially seizing an opportunity provided by a fire, I couldn't resist the reference to Queensrÿche's masterpiece "Take Hold of the Flame."  Indeed, fire or no fire, it was time for DSG to make a definitive move, to hard-shift from the store we thought would be pretty good for many in general, to a store we knew we could make excellent for those who wanted what we were focused on doing.  We took hold of the flame; we had nothing to lose, and everything to gain.  And so that you can enjoy it in all its glory, here is the best metal vocal performance ever filmed.